Editorial: A hopeful vote on Medicare

After signing it, President Barack Obama closes the bill H.R. 2 Medicare Access and CHIP Reauthorization Act of 2015 in the Rose Garden of the White House in Washington on Thursday.

After signing it, President Barack Obama closes the bill H.R. 2 Medicare Access and CHIP Reauthorization Act of 2015 in the Rose Garden of the White House in Washington on Thursday.

Photo: AP Photo

Photo: AP Photo

Image
1of/1

Caption

Close

Image 1 of 1

After signing it, President Barack Obama closes the bill H.R. 2 Medicare Access and CHIP Reauthorization Act of 2015 in the Rose Garden of the White House in Washington on Thursday.

After signing it, President Barack Obama closes the bill H.R. 2 Medicare Access and CHIP Reauthorization Act of 2015 in the Rose Garden of the White House in Washington on Thursday.

Photo: AP Photo

Editorial: A hopeful vote on Medicare

1 / 1

Back to Gallery

We don’t quite share Capitol Hill’s sense of joyful self-congratulation over the Medicare bill that has passed the Senate en route to President Barack Obama’s likely signature. On the plus side, Congress did away with an outmoded and increasingly unrealistic formula for reimbursing doctors that had necessitated time-consuming annual “doc fixes.” And yes, lawmakers achieved this long-postponed reform on a bipartisan, bicameral basis, with the White House on board as well. But the legislation is hardly the hammer blow for fiscal responsibility that supporters claim; in fact, it will add $141 billion to the projected deficit over the next decade because the two parties could not agree on enough offsetting savings elsewhere within Medicare. In short, this one last doc fix shows that Democrats and Republicans can agree to spend more without paying for it: This is not good news, or news at all, really.

Nevertheless, there is a kernel or two of incipient structural reform tucked into the measure. We refer specifically to its provisions on the market for supplemental insurance, known as Medigap, which some 9 million seniors currently purchase to cover Medicare’s deductibles and other cost-sharing requirements. Economic theory suggests that patients will use medical services excessively when they face little or no out-of-pocket cost; numerous studies of Medigap have concluded that this is indeed what happens. The result is more use of services and higher costs for everyone. Therefore, Medicare reformers on both sides of the aisle have argued that limitations on Medigap could do a lot to bend the curve of rising health-care costs. Purveyors of these policies have lobbied against such reforms.

The new doc fix says that Medigap plans would no longer cover the annual deductible for physician services under Medicare, which is roughly $147 at present. Seniors would be on the hook for that amount themselves. To be sure, this is less skin in the game than the bill’s proponents initially wanted. And the limit applies only to those who enroll in Medicare from 2020 onward. Net deficit reduction attributable to the change will be modest indeed: only about $400 million through 2025, according to the Congressional Budget Office. Yet it’s likely that the savings would snowball thereafter, as more people join the program subject to the limitation. The change’s true importance may lie in the precedent it sets — namely, that Medigap plans are not, after all, politically sacrosanct and therefore may be subject to further reform in future Congresses.

Of course, that can’t happen unless this modest change survives until its planned rollout five years hence. Be assured that Congress will come under pressure to undo it long before then. Lawmakers will need all the political courage they can muster to resist.